Spain’s Banco Santander, which has been facing growing criticism for being a lead financier in a highly controversial dam project in the Brazilian Amazon, recently signed on to the “Equator Principles,” a set of socially and environmentally responsible financing guidelines adopted by a growing number of private banks.  At an annual meeting of the Equator banks this week in Washington, D.C., environmental organizations are challenging Banco Santander to demonstrate its commitment to the Equator Principles by pulling out of all aspects of the controversial Madeira Dam Complex.

The Santo Antônio and Jirau hydroelectric dams being built on Brazil’s Madeira River, the principal tributary to the Amazon River, have generated enormous controversy in Brazil due to the drastic environmental and social threats the projects pose to the region’s complex and fragile ecosystems as well as to the indigenous and traditional communities that rely on the waterway for their survival. In addition to adverse social and environmental impacts, the financing of the dams is also risky from a financial viewpoint, as several legal actions against the projects illustrate. 

Banco Santander has a leading role in financing the dam building despite clear non-conformities with the Principles.

The bank adopted the Principles joining other Equator Principles Financial Institutions (EPFIs), in order to “ensure that the projects they finance are developed in a manner that is socially responsible and reflect sound environmental management practices.” In doing so, EPFIs commit to “avoiding negative impacts on project-affected ecosystems and communities.” Moreover, EPFIs commit to not providing “loans to projects where the borrower will not or is unable to comply with our respective social and environmental policies.” 

“Banco Santander’s financing to the Santo Antônio dam is enabling drastic environmental impacts to unfold in the Amazon,” says Roland Widmer, the manager of the Eco-Finance Program at the Friends of the Earth of the Brazilian Amazon. “There are serious irregularities in the dams’ environmental licensing process.  Also dam construction has already caused an environmental disaster, including the killing of over 11 tons of fish, which has led to fines of over R$ 9 million (US$ 4.26 million).  The region’s indigenous peoples say they have not been adequately consulted about the dams and have demanded that the licenses be revoked.”

Banco Santander has played a leading role in advising and coordinating the financial structure of Santo Antonio dam and holds a 5% equity stake in the project. In an April 30 press release, Santander claims that “social and environmental criteria will be applied globally to all new project finance lending and advisory activities across all industry sectors, in accordance with the Equator Principles declaration” confirming “the bank’s commitment to sustainable development worldwide.” However, with their intrinsic support for the Santo Antonio dam Santander is abandoning its adherence to social and environmental criteria as well as to sustainability.

The actual – and probable – environmental damages caused by the dams are in direct violation of Brazil’s constitution while the lack of the free, prior, and informed consent of the impacted indigenous communities breaches Convention 169 of the International Labor Organization, which was ratified by Brazil, as well as the United Nations Declaration on the Rights of Indigenous Peoples.

Glenn Switkes, the Director of the Amazon Program at International Rivers, commented, “Banco Santander’s support of the Santo Antonio dam is a clear contradiction to its stated aspirations for sustainability and social and environmental responsibility. There is no question that the Madeira dams violate the Equator Principles. Banco Santander should pull out of the Madeira complex.”